Update on SS adjustment for ER... That's all?

[Telly]

In 2003 I requested a "special" estimate from the SSA. It had me retired, no more wages going in, ever.

I did the same, the same month but in 2004. All initial conditions were the same as the 2003 request.

The 2004 special statement result was that the age 62 benefit increased by only .94% over the 2003 amount. The age 66 amount also increased by .94 %.

Less than 1% increase. Does this mean that the the nationally spec'd wage increases from 2003 to 2004 were that bad, but I can expect that other years to come may have a significantly greater increase?

Or, does this wage adjustment thing just result in low increases if you have no new wages through the SS retirement age?

 

[cc]

That does sound a little low but I don't think the inflation adjustments were much more than that the last few years...

Also, FWIW, you can download the SS calculator and run estimates with various retirement dates, annual income estimates, etc. All results are based on the calculator version though - e.g. 2004.1 - so the inflation factor is the same for all runs...

 

[cc]

Well, I plugged in the 2005 calculator updates and reran my same numbers. My PIA increased 2.36%. The COLA for 2005 is 2.7%. I think the difference is the wage-indexing adjustment. We had a discussion on that a while back but I'm still hazy on how it works...

 

[Michael]

President Bush plans to prioritize modifying Social Security. A major part of his plan is changing the way benefits are calculated for anyone under the age of 55. Expect the numbers to change unless you are over 55 when his plan passes.

 

[Cut-Throat]

Expect the numbers to change unless you are over 55 when his plan passes.

I would say IF it passes.

 

[Cal]

I would say IF it passes.

Who is going to oppose it?

 

[REWahoo]

Who is going to oppose it?

Guess who?


Democrats vow Social Security fight
November 6, 2004: 11:38 AM EST

WASHINGTON (Reuters) - Democrats vowed Saturday to protect the Social Security retirement program from "privatization" by President Bush and his Republican allies, who expanded their Congressional majorities in elections this week.

Rep. Nancy Pelosi, House minority leader, said Democratic lawmakers would work with Bush where they could during his second term, but Social Security was an issue on which they differed with the president.

"Democrats will stand our ground," she declared in the party's weekly radio address.

 

[Bob_Smith]

And who says it's 55? I don't think a plan that sticks it to people who have already paid into the system for 30+ years and are only a few years from collecting would pass.

 

[Michael]

And who says it's 55?

President Bush promised to protect those over age 55 from any changes in Social Security.  Here is one reference to this fact by a former commisioner of SS:

http://www.ourfuture.org/issues_and_campaigns/socialsecurity/resources/op_eds/readarticle141.cfm

 

[Michael]

Democrats will stand our ground

The Democrats are badly outvoted, and President Bush is making changing Social Security a top priority. He may have to compromise, but expect some changes.

 

[Bob_Smith]

Thanks for the link Michael - good article. I don't think he can pull it off. The plan is just plain dumb, and if he tries to float it, all hell will break loose. The Democrats will stand firm, and moderate Republicans will join them. Then Democrats will regain control of the house in 2006. He won't be able to cram this through.

 

[cute fuzzy bunny]

President Bush promised to protect those over age 55 from any changes in Social Security.

Good one.

He also said Hussein had chemical and biological weapons and was acquiring the components to build a nuke. Hussein was also behind 9/11. Except later on when none of that turned out to be true, he said he never said any of those things.

So what will happen is he'll do what he wants, and when it doesnt match up with what he said, Cheney will explain that the president was taken out of context, and that the term "55" is simply symbolic.

Remember George HW's "Read my lips, no new taxes!" ?

 

[sgeeeee]

What I'm counting on is that Republican Congressmen and Senators will become concerned for their own re-election bids. Although Bush does not have to run for re-election again, they do. Legislation that screws up Social Security is likely to have an adverse effect on one's electability. I think Bush's own party will begin to oppose him on a number of issues.

 

[amt]

If you guys don't agree with Bush's plan on SS, how do you propose we should modify it?

Everyone agrees that it will go bankrupt by 2042, even after cashing out all of the trust fund's IOUs from fed govt.

 

[cute fuzzy bunny]

I would propose that we curb spending in other areas and redirect the funding into replenishing social security, rather than implement new taxes and plans.

After all, if your bank account is running out while you're spending like a drunken sailor, is getting a 3rd job your best bet to solve the funding problem?

 

[sgeeeee]

If you guys don't agree with Bush's plan on SS, how do you propose we should modify it?

 Everyone agrees that it will go bankrupt by 2042, even after  cashing out all of the trust fund's IOUs from fed govt.

Well . . . obviously there needs to be some combination of 1) reduction in benefits (through actual payout, caps, taxing of benefits, reduced COLA, etc.)
2) increased FICA rate
3) borrowing from the General Fund

But ask the same question of the Bush proposal. How would that solve the problem? How is a proposal to reduce FICA for current workers going to solve the problem? Aren't we going to have the same demands for benefit payouts for the next several decades (when the crises is supposed to occur)? Yet we are going to have less ss tax collection during that time. I keep waiting for someone from this administration to explain how that fixes the social security problem.

 

[amt]

But ask the same question of the Bush proposal.  How would that solve the problem?  How is a proposal to reduce FICA for current workers going to solve the problem?  Aren't we going to have the same demands for benefit payouts for the next several decades (when the crises is supposed to occur)?  Yet we are going to have less ss tax collection during that time.  I keep waiting for someone from this administration to explain how that fixes the social security problem.

IMHO, Bush's plan makes sense because the younger people who participate in these IRA-like accounts will not need SS come their times for normal retirement because investing in the markets is more likely to produce better results than relying on the govt.

In the meantime, SS "surpluses/IOUs" should allow the continued benefits for about 10 years or so, then we'll have to have a combination of siphoning from general funds/cutting benefits/increasing taxes for those older generations. The key here is that it would be for a limited time. Whenever you can see the light at the end of the tunnel, things can be a little more bearable.

For the younger people, who would have had a chance to participate in the markets based plan but chose not to, I think their benfits would be cut.

We have to pay for it one way or another. Don't you think investing in the markets with low cost balanced index funds would beat govt's dismal return on your taxes?

I think the best part of the Bush plan is that these young workers will be able to see their account balances not unlike IRAs with the knowledge that it is their account and govt can't take it all away (except for taxes of course) and can pass on to their heirs.

 

[unclemick]

I'm sure Congress and the relavant gov. agencies will post their calc's and simulations on the web so the enginer types who post here can review them.

 

[Smoochie]

"I think the best part of the Bush plan is that these young workers will be able to see their account balances not unlike IRAs with the knowledge that it is their account and govt can't take it all away (except for taxes of course) and can pass on to their heirs".


If the government can now take away retirement money from a healthy spouse when an ill spouse needs long term care, what's to stop them from taking away the new SS accounts? At least now the healthy spouse will still get a SS check.

 

[Tadpole]

President Bush promised to protect those over age 55 from any changes in Social Security.  Here is one reference to this fact by a former commisioner of SS:

http://www.ourfuture.org/issues_and_campaigns/socialsecurity/resources/op_eds/readarticle141.cfm

One of the major confusions of the plans since the Clinton days has been this "near retiree" definition. The reference you give was written in year 2000. These 55 year olds are now 59 years old. One piece of legislation that was first submitted and sited an age of 55 was resubmitted the next year and sited an age of 55 as of "2003" (or 2002, I don't remember).

The transition costs are anywhere between 500 billion and 2 trillion dollars depending on the politics of the source (pro or con privatization).

The diverted amount ranges from 2% to 5% depending on the plan or the musing of a plan.

A worker starting at $50,000 today, investing 5% in an SP500 type plan, with 3% annual salary increase would have a little over $1 million after 40 years.

Retirees and "near retirees" will receive reduced COLAs to offset some of the cost in most plans. (Think of this as a sneaky way to decrease benefits without saying so.) To offset the impact on the lower income end, benefits will be more aggressively shifted from the higher income end in some plans.

Where is the money coming from George? My best guess is that it will come from the SS fund itself and be factored into the new algorithms to produce the reduced benefits.

The real impact date is 2016 or there about. The SS fund surplus that was collected to offset the boomers really exists as IOUs (gov. securities). Now, if the big spender continues his habits, who is going to be all that willing to cash in the IOUs and pay for them out of the general budget? The federal deficit is key to whether any campaign promises of any politician will or can be honored.

I thought Congress would not do an aggressive privitization until I saw the medicare prescription bill beat through. If there ever was a costly, poorly thought out bill, this was it. Now I believe the SS changes will be rushed through before those most affected (age 40-60) know what is going on and how it impacts them. It sounds so good to hear that the solution leave critical people safe while securing the children's future.

I believe some solution of this type is inevitable. I just wish someone besides a quick shooter was pulling the gun. If they miss as they did in the medicare bill and won't admit a miss, there are going to be some mighty surprised people when they retire.

 

[John Galt]

Well Tadpole, we agree on one thing. Whatever they
do on SS, they will most likely screw it up. I also am unhappy with the Medicare bill, plus "No Child Left Behind", plus illegal immigrant legislation. All
terrible stuff IMHO.

John Galt

 

[Michael]

But ask the same question of the Bush proposal. How would that solve the problem?

By changing the formula to give lower benefits to anyone under the chosen age. The rest is just a smoke screen.

 

[Michael]

I would propose that we curb spending in other areas and redirect the funding into replenishing social security, rather than implement new taxes and plans.

The problem with this plan is that most politicians could not get reelected by following it. They depend upon campaign contributiions from special interest groups, and have to dole out the pork to get the contributions.

 

[Telly]

Well, I plugged in the 2005 calculator updates and reran my same numbers. My PIA increased 2.36%. The COLA for 2005 is 2.7%. I think the difference is the wage-indexing adjustment. We had a discussion on that a while back but I'm still hazy on how it works...

cc, Thanks for the reply. It got me thinking...

The special statements I got were August of 2003 and August of 2004. Between those two was the .94% increase.

Before that, I had downloaded the Calculator in 2002, and again in 2003. But the August 2003 special statement showed a slightly larger $ amount than the calculator, so I had just decided to request specials every summer from then on.

Tonight I downloaded the new 2005.1 calculator, and loaded it up with all the data. And it came up with... a lower number! In fact, a familiar number I had had a while ago. Strange. I checked the version number, and it said 2002! Whaaa? I just downloaded it!

Hmmm, suspected that although having different SS calculator versions on the PC seemed to all peacefully coexist, that the calculations were always using a table from the oldest one! That would make sense why the 2003 "calculated" was different than the 2003 "statement"! So de-installed all versions of the calculator, and downloaded the 2005.1 again. This time it works. It shows the for 2005 amount to be 2.41% greater than the special estimate for 2004.

So this is what I think I have for increases due to yearly SSA wage adjustments, remembering that there are NO new wages in any of this:

2002 to 2003 Increases by 2.33%
2003 to 2004 Increases by 0.94%
2004 to 2005 Increases by 2.41%

Thanks again, cc! I'm feeling a little better about this now, at least it is increasing at a measurable fraction of CPI!

 

[cc]

Telly, glad I could help - I'm still trying to make sense of all this myself. The calculator is somewhat non-intuitive and I'm not sure how much to trust the results. I updated my 2004.1 version with the 2005 parameters but I suppose I should download 2005.1.

One question for you - you said you "loaded it up with all the data" - do you mean manually? I would hope it could still read my old data files...